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Finance Commission

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Meeting Accessibility. Under the Americans with Disabilities Act, the agency will accommodate special needs. Those requesting auxiliary aids or services should notify the Finance Commission of Texas Administrator several days prior to

the meeting using the contact information above by mail, telephone, or email.

FINANCE COMMISSION OF TEXAS

MEETING DATE ........................................ August 21, 2020

MEETING LOCATION ............................. Via Webinar

CONTACT INFORMATION..................... Phone: (512) 936-6222 Website: www.fc.texas.gov

FUTURE MEETING DATES .................... October 16, 2020 December 11, 2020 February 19, 2021 April 16, 2021 June 18, 2021 August 20, 2021 October 15, 2021 December 17, 2021

** The State of Texas fiscal year begins September 1 and ends August 31. The dates noted meet the minimum statutory requirement of six meetings per calendar year. Fin. Code §11.106.

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http://www.fc.texas.gov/


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FINANCE COMMISSION AGENDA

Friday, August 21, 2020 9:30 a.m.

or Upon Adjournment of the Audit Committee Meeting Via Webinar

Due to Governor Greg Abbott’s March 13, 2020 proclamation of a state of disaster affecting all counties in Texas due to the Coronavirus (COVID-19) and the Governor’s March 16, 2020 suspension of certain

provisions of the Texas Open Meetings Act, the August 21, 2020 meeting of the Finance Commission of Texas will be held via webinar/telephonic conference call, as authorized under Texas Government Code

section 551.125.

Members of the public who would like to participate in this meeting will need to register at www.fc.texas.gov. An electronic copy of the agenda is now available at www.fc.texas.gov, and a copy of the meeting materials will

be available on August 13, 2020 at www.fc.texas.gov. To access the recording visit www.fc.texas.gov after August 21, 2020.

Section A.3 will take up agenda items A1, A8, A9, and C2 – C4 with NO DISCUSSION as notated in bold and italicized

Public comment on any agenda item or issue under the jurisdiction of the Finance Commission of Texas agencies is allowed unless the comment is in reference to a rule proposal for which the public comment period has ended. However, upon majority vote of the Commission, public comment may be allowed related to final rule adoption.

A. FINANCE COMMISSION MATTERS

1. Review and Approval of the Minutes of the June 19, 2020 Finance Commission Meeting

2. General Public Comment 3. Consent Agenda 4. Finance Commission Operations

5. Audit Committee Report

A. Discussion of and Possible Vote to Recommend that the Finance Commission Take Action

on the Agencies’ 2020 Third Quarter Investment Officer Reports

1. Department of Savings and Mortgage Lending 2. Office of Consumer Credit Commissioner 3. Texas Department of Banking

B. Discussion of and Possible Vote to Recommend that the Finance Commission Take Action on the Readoption of the Investment Policies for:

1. Department of Savings and Mortgage Lending 2. Office of Consumer Credit Commissioner 3. Texas Department of Banking

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C. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Agencies’ 2020 Third Quarter Financial Statements

1. Department of Savings and Mortgage Lending2. Office of Consumer Credit Commissioner3. Texas Department of Banking

D. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Agencies’ Fiscal Year 2021 Operating Budgets

1. Department of Savings and Mortgage Lending2. Office of Consumer Credit Commissioner3. Texas Department of Banking

E. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Department of Savings and Mortgage Lending’s 2020 Annual Internal Audit Reportas Prepared and Presented by Garza/Gonzalez & Associates

F. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Office of Consumer Credit Commissioner’s 2020 Annual Internal Audit Report asPrepared and Presented by Garza/Gonzalez & Associates

G. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Texas Department of Banking’s Revenue Accounting Process Audit Report asPrepared and Presented by Garza/Gonzalez & Associates

H. Discussion of and Possible Vote to Recommend that the Finance Commission Take Actionon the Texas Department of Banking’s 2020 Annual Internal Audit Report as Prepared andPresented by Garza/Gonzalez & Associates

6. Strategic Planning Committee Report

A. Discussion of and Possible Vote to Recommend that the Finance Commission Take Action on the Finance Commission of Texas 2021-2025 Strategic Plan

7. Discussion of and Possible Vote to Take Action on the Agency Priorities for Fiscal Year 2021 for the Commissioners of the Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner and the Texas Department of Banking

8. Discussion of and Possible Vote to Take Action on the Adoption of Amendments to 7 TAC §155.2, Concerning Payoff Statement Form

9. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 8, Chapter 151, Concerning Home Equity Lending Procedures, Chapter 152, Concerning Repair, Renovation, and New Construction on Homestead Property , and Chapter 153, Concerning Home Equity Lending, Resulting from Rule Review

10. Discussion of and Possible Vote to Take Action on the Proposal of Amendments, a New Rule, and a Repeal in 7 TAC, Part 8, Chapter 151, Concerning Home Equity Lending Procedures, and Chapter 153, Concerning Home Equity Lending, Resulting from Rule Review

11. Discussion of and Possible Vote to Take Action Regarding Personnel Matters Pursuant to §551.074, Texas Government Code: Deliberations with Respect to the Duties and Compensation of a Person Holding the Position of Executive Director of the Finance Commission, Deliberations with Respect to the Duties and Compensation of Persons Holding the Position of Agency Commissioner Positions, and Other Staff

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12. Discussion of and Possible Vote to Take Action Regarding Facility Planning and Real Property Matters Pursuant to §551.072, Texas Government Code: Deliberations Regarding the Purchase, Exchange, Lease or Value of Real Property

13. Discussion of and Consultation with Attorney and Possible Vote to Take Action Pursuant to §551.071,

Texas Government Code, for the Purpose of Seeking the Advice or Attorney-client Privileged Communications from our Attorneys, Including Matters Related to the Potential Financial Exposure of the Finance Commission Agencies and Their Officers and the Finance Commission and its Officers and Including Matters of Pending and Contemplated Litigation

14. Discussion of and Consultation on Security Audit, Possible Issue Related to Confidential or Sensitive

Information, Security Breach Audit and Assessment, or Security Assessments or Deployment Related to Information Resources Technology as Authorized by Tex. Govt. Code Secs. 551.076 and 551.089

B. DEPARTMENT OF SAVINGS AND MORTGAGE LENDING

1. Industry Status and Departmental Operations: a) State Savings Bank Examinations and Supervision Division Activities; b) Mortgage Licensing Division Activities; c) Mortgage Examinations Division Activities; d) Consumer Complaints Division Activities; e) Administration and Finance Division Activities; f) Legal Division Activities, including Gift Reporting; and g) Legislative Activities

2. Discussion of and Possible Vote to Take Action on the Adoption of Amendments to 7 TAC §76.98,

Concerning Annual Fee To Do Business 3. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Chapter 79, Residential

Mortgage Loan Servicers, Chapter 80, Texas Residential Mortgage Loan Companies, and Chapter 81, Mortgage Bankers and Residential Mortgage Loan Originators, Resulting from Rule Review

4. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of

Amendments to 7 TAC §79.1 and §79.2, Concerning Residential Mortgage Loan Servicers, Resulting from Rule Review


Amendments to 7 TAC §§80.1, 80.2, 80.200, 80.202 - 80.206, 80.300, and 80.301, Concerning Texas Residential Mortgage Loan Companies, Resulting from Rule Review


Amendments to 7 TAC §§81.1 - 81.3, 81.200, 81.202 - 81.206, 81.300 and 81.301, Concerning Mortgage Bankers and Residential Mortgage Loan Originators, Resulting from Rule Review

7. Discussion of and Possible Vote to Take Action on Anticipated and Pending Litigation

C. OFFICE OF CONSUMER CREDIT COMMISSIONER 1. Industry Status and Departmental Operations: a) Consumer Protection and Assistance Division

Activities; b) Licensing Division Activities; c) Administration Division Activities; d) Financial Division Activities; e) Legal Division Activities; and f) Legislative Activities

2. Discussion of and Possible Vote to Take Action on the Adoption of the Repeal of §85.1012 in 7 TAC,

Part 5, Chapter 85, Subchapter B, Concerning Rules for Crafted Precious Metal Dealers, Resulting from Rule Review

3. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 5, Chapter 82,

Concerning Administration, Resulting from Rule Review

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4. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 5, Chapter 87, Concerning Tax Refund Anticipation Loans, Resulting from Rule Review


Amendments to 7 TAC, Part 5, Chapter 82, Concerning Administration, Resulting from Rule Review


Ernest Polk v. Texas Office of Consumer Credit Commissioner; Cause No. 2018-04375, in the 281st Judicial District Court of Harris County, Texas

D. TEXAS DEPARTMENT OF BANKING

1. Industry Status and Departmental Operations: a) Current Issues Affecting Department’s Regulated Entities; b) Bank and Trust Division Activities; c) Corporate Division Activities; d) Non-Depository Supervision Division Activities; e) Administrative, Staffing and Fiscal Division Activities; f) Strategic Support Division Activities including Consumer Complaint Data; g) Legal Division Activities including Enforcement Activity and Gift Reporting; and h) Legislative Activities

2. Discussion of and Possible Vote to Take Action on the Adoption of Amendments to 7 TAC §12.91, Concerning Other Real Estate Owned


NOTE: The Finance Commission of Texas may go into executive session (close its meeting to the public) on any agenda item if appropriate and authorized by the Open Meetings Act, Texas Government Code, Chapter 551.

Meeting Accessibility: Under the Americans with Disabilities Act, the Finance Commission of Texas will accommodate special needs. Those requesting auxiliary aids or services should notify the Texas Department of Banking, 2601 North Lamar Boulevard, Austin, Texas 78705, (512) 936-6222, as far in advance of the meeting as possible.

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MINUTES OF THE FINANCE COMMISSION MEETING

Friday, June 19, 2020

The Finance Commission of Texas convened at 9:10 a.m. on June 19, 2020 with the following members present:

Finance Commission Members in Attendance:

Phillip Holt, Chairman Molly Curl George “Cliff” McCauley, Vice Chairman Will Lucas Dr. Robin Armstrong Sharon McCormick Bob Borochoff Laura Warren Hector Cerna Vince Puente

Chairman Phillip Holt announced there was a quorum with eleven members present. (1:38 on audio file).

AGENDA ITEM ACTION

LOCATION ON

AUDIO FILE

A. Finance Commission Matters

1. Review and Approval of the Minutes of the April 17,2020 Finance Commission Meeting On Consent Agenda – Item A1

4:10 start of

discussion

2. General Public Comment No Action Required. 4:20

start of discussion

3. Consent Agenda – Item A1Laura Warren made a motion to Approve Consent Agenda item A1. Molly Curl seconded and the motion passed.

5:07 start of

discussion

5:37 Vote

4. Finance Commission Operations No Action Required. 6:06

start of discussion

5. Audit Committee Report

A. Discussion of and Possible Vote to Recommendthat the Finance Commission Take Action toReapprove the Internal Auditor Contract forGarza/Gonzalez & Associates for Fiscal Year 2021

Coming upon Recommendation from the Audit Committee, no second is required and the motion to Reapprove the Internal Auditor Contract for Garza/Gonzalez & Associates for Fiscal Year 2021 passed.

15:46 start of

discussion

16:04 Vote

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Larry Long

Minutes of the June 19, 2020 Finance Commission Meeting Page 2 of 6

AGENDA ITEM ACTION LOCATION ON AUDIO

FILE

6. Strategic Planning Committee Report

A. Discussion of and Possible Vote to Recommend that the Finance Commission Take Action on the Agencies’ 2021-2025 Strategic Plans

1. Office of Consumer Credit Commissioner 2. Texas Department of Banking 3. Department of Savings and Mortgage Lending

Public comment was made by Steve Scurlock on behalf of the Independent Bankers Association of Texas (IBAT). Laura Warren made a motion to approve the Agencies’ 2021-2025 Strategic Plans. Will Lucas seconded and the motion passed.

16:23 start of

discussion

26:24 vote

B. Discussion of the Finance Commission of Texas 2021-2025 Strategic Plan No Action Required.

27:25 start of

discussion

7. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC, §155.2, Concerning Payoff Statement Form

Vince Puente made a motion to Approve the Proposal and Publication for Comment of Amendments to 7 TAC, §155.2, Concerning Payoff Statement Form. Laura Warren seconded and the motion passed.

30:09 start of

discussion

42:12 Vote

8. Discussion of and Possible Vote to Take Action Regarding Personnel Matters Pursuant to §551.074, Texas Government Code: Deliberations with Respect to the Duties and Compensation of a Person Holding the Position of Executive Director of the Finance Commission, Deliberations with Respect to the Duties and Compensation of Persons Holding the Position of Agency Commissioner Positions, and Other Staff

Deferred to Executive Session – no vote taken. n/a

9. Discussion of and Possible Vote to Take Action Regarding Facility Planning and Real Property Matters Pursuant to §551.072, Texas Government Code: Deliberations Regarding the Purchase, Exchange, Lease or Value of Real Property


10. Discussion of and Consultation with Attorney and Possible Vote to Take Action Pursuant to

§551.071, Texas Government Code, for the Purpose of Seeking the Advice or Attorney-client

Privileged Communications from our Attorneys, Including Matters Related to the Potential

Financial Exposure of the Finance Commission Agencies and Their Officers and the Finance Commission and its Officers and Including Matters of Pending and Contemplated Litigation


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FILE

11. Discussion of and Consultation on Security Audit, Possible Issue Related to Confidential or Sensitive Information, Security Breach Audit and Assessment, or Security Assessments or Deployment Related to Information Resources Technology as Authorized by Tex. Govt. Code Secs. 551.076 and 551.089


B. Office of Consumer Credit Commissioner

1. Industry Status and Departmental Operations: a) Consumer Protection and Assistance Division Activities; b) Licensing Division Activities; c) Administration Division Activities; d) Financial Division Activities; e) Legal Division Activities; and f) Legislative Activities

No Action Required. 42:56

start of discussion

2. Consent Agenda – Item B2 Laura Warren made a motion to Approve Consent Agenda item B2. Molly Curl seconded and the motion passed.

5:07 start of

discussion

5:37 Vote


5:07 start of

discussion

5:37 Vote


5:07 start of

discussion

5:37 Vote

5. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments, a New Rule, and a Repeal in 7 TAC, Part 5, Chapter 83, Subchapter B, Concerning Rules for Credit Access Businesses, Resulting from Rule Review

Laura Warren made a motion to Approve the Proposal and Publication for Comment of Amendments, a New Rule, and a Repeal in 7 TAC, Part 5, Chapter 83, Subchapter B, Concerning Rules for Credit Access Businesses, Resulting from Rule Review. Bob Borochoff seconded and the motion passed.

1:09:13 start of

discussion

1:15:51 Vote

6. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of the Repeal of §85.1012 in 7 TAC, Part 5, Chapter 85, Subchapter B, Concerning Rules for Crafted Precious Metal Dealers, Resulting from Rule Review

Hector Cerna made a motion to Approve the Proposal and Publication for Comment of the Repeal of §85.1012 in 7 TAC, Part 5, Chapter 85, Subchapter B, Concerning Rules for Crafted Precious Metal Dealers, Resulting from Rule Review. Will Lucas seconded and the motion passed.

1:16:29 start of

discussion

1:19:15 vote

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FILE

7. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments and a New Rule in 7 TAC, Part 5, Chapter 89, Concerning Property Tax Lenders

Vince Puente made a motion to Approve the Proposal and Publication for Comment of Amendments and a New Rule in 7 TAC, Part 5, Chapter 89, Concerning Property Tax Lenders. Laura Warren seconded and the motion passed.

1:19:57 start of

discussion

1:26:04 vote


Ernest Polk v. Texas Office of Consumer Credit Commissioner; Cause No. 2018-04375, in the 281st Judicial District Court of Harris County, Texas

State of Texas v. Cash Auto Sales, Inc. f/k/a Larry Lake d/b/a Cash Auto Sales and VIP Finance of Texas, Inc. f/k/a Travis Lake d/b/a VIP Finance; Case No. 19-0999, in the Supreme Court of Texas

No Action Required. n/a

C. Texas Department of Banking

1. Industry Status and Departmental Operations: a) Current Issues Affecting Department’s Regulated Entities; b) Bank and Trust Division Activities; c) Corporate Division Activities; d) Non-Depository Supervision Division Activities; e) Administrative, Staffing and Fiscal Division Activities; f) Strategic Support Division Activities including Consumer Complaint Data; g) Legal Division Activities including Enforcement Activity and Gift Reporting; and h) Legislative Activities

No Action Required. 1:26:48 start of

discussion

2. Consent Agenda – Item C2 Laura Warren made a motion to Approve Consent Agenda item C2. Molly Curl seconded and the motion passed.

5:07 start of

discussion

5:37 Vote

3. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC §12.91 Concerning Other Real Estate Owned

Cliff McCauley made a motion to Approve the Proposal and Publication for Comment of Amendments to 7 TAC §12.91 Concerning Other Real Estate Owned. Hector Cerna seconded and the motion passed.

1:59:16 start of

discussion

2:08:01 vote

4. Discussion of and Possible Vote to Take Action on Anticipated and Pending Litigation No Action Required. n/a

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FILE

D. Department of Savings and Mortgage Lending

1. Industry Status and Departmental Operations: a) State Savings Bank Examinations and Supervision Division Activities; b) Mortgage Licensing Division Activities; c) Mortgage Examinations Division Activities; d) Consumer Complaints Division Activities; e) Administration and Finance Division Activities; f) Legal Division Activities, including Gift Reporting; and g) Legislative Activities

No Action Required. 2:08:39 start of

discussion

2. Discussion of and Possible Vote to Take Action on the Adoption of Amendments to 7 TAC §77.73 Concerning Investment in Banking Premises and Other Real Estate Owned

Will Lucas made a motion to Approve the Adoption of Amendments to 7 TAC §77.73 Concerning Investment in Banking Premises and Other Real Estate Owned. Laura Warren seconded and there was further discussion. Molly Curl made a motion to amend the primary motion with language that the adopted amendments be published in the Texas Register with appropriate edits to reflect that the appraisal/evaluation threshold be set at $500,000 and the timeline by which the state savings bank makes the appraisal or evaluation extended from 60 days to 90 days. Laura Warren seconded and the amended motion passed.

2:31:36 start of

discussion

2:43:34 vote

3. Discussion of and Possible Vote to Take Action on the Re-Adoption of 7 TAC, Chapter 79, Residential Mortgage Loan Servicers (§§79.1 - 79.5, 79.20, 79.30, 79.40, 79.50), Chapter 80, Texas Residential Mortgage Loan Companies (§§80.1 - 80.5, 80.100, 80.102 - 80.104, 80.106, 80.107, 80.200 - 80.206, 80.300 - 80.302), and Chapter 81, Mortgage Bankers and Residential Mortgage Loan Originators (§§81.1 - 81.5, 81.100 - 81.109, 81.200 - 81.206, 81.300 - 81.302), Resulting from Rule Review

Removed from agenda – no discussion. n/a

4. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC §76.98, Concerning Annual Fee To Do Business

Larry Long made a motion to Approve the Proposal and Publication for Comment of Amendments to 7 TAC §76.98, Concerning Annual Fee To Do Business. Molly Curl seconded and the motion passed.

2:49:23 start of

discussion

3:02:07 vote

5. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC §79.1 and §79.2, Concerning Residential Mortgage Loan Servicers, Resulting from Rule Review


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FILE

6. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC §§80.1, 80.2, 80.200, 80.202 - 80.206, and 80.301, Concerning Texas Residential Mortgage Loan Companies, Resulting from Rule Review


7. Discussion of and Possible Vote to Take Action on the Proposal and Publication for Comment of Amendments to 7 TAC §§81.1 - 81.3, 81.200, 81.202 - 81.206, 81.300 and 81.301, Concerning Mortgage Bankers and Residential Mortgage Loan Originators, Resulting from Rule Review


8. Discussion of and Possible Vote to Take Action on Anticipated and Pending Litigation No Action Required. n/a

There being no further business, Chairman Phillip Holt adjourned the meeting of the Finance Commission at 12:20 p.m. (3:08:24 on the audio file).

Phillip Holt, Chairman Finance Commission of Texas

Charles G. Cooper, Executive Director Finance Commission of Texas

Brenda Medina, Executive Assistant Finance Commission of Texas

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Finance Commission of Texas

Consent Agenda

August 21, 2020

A. Finance Commission Matters

1. Review and Approval of the Minutes of the June 19, 2020 Finance Commission Meeting

8. Discussion of and Possible Vote to Take Action on the Adoption of Amendments to 7 TAC§155.2, Concerning Payoff Statement Form

9. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 8, Chapter 151, Concerning Home Equity Lending Procedures, Chapter 152, Concerning Repair, Renovation, and New Construction on Homestead Property , and Chapter 153, Concerning Home Equity Lending, Resulting from Rule Review

C. Office of Consumer Credit Commissioner

2. Discussion of and Possible Vote to Take Action on the Adoption of the Repeal of §85.1012in 7 TAC, Part 5, Chapter 85, Subchapter B, Concerning Rules for Crafted PreciousMetal Dealers, Resulting from Rule Review

3. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 5, Chapter82, Concerning Administration, Resulting from Rule Review

4. Discussion of and Possible Vote to Take Action on the Readoption of 7 TAC, Part 5, Chapter87, Concerning Tax Refund Anticipation Loans, Resulting from Rule Review

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DEPARTMENT of

SAVINGS & MORTGAGE LENDING Caroline C. Jones, Commissioner

Agency Priorities for Fiscal Year 2021

I. Legislative Items

I.1 Objective: Monitor legislation, throughout the 87th Legislative Session, that may affect

the Department, or its regulated industries; analyze the potential impact, and plan

implementation of legislative changes as needed.

Measure: Provide regular updates to the Finance Commission on the status of such

legislation.

I.2 Objective: Serve as a resource for the Texas Legislature and other members of

leadership. Respond promptly and accurately to any requests for information, providing

appropriate and comprehensive resource materials, as legally permissible.

Measure: Notify Finance Commission members about any testimony given by the

Department.

I.3 Objective: Monitor federal legislation and regulations that may affect the Department or

its regulated entities.

Measure: Communicate relevant information with the Finance Commission and industries,

as necessary.

I.4 Objective: At Finance Commission direction, continue to explore and collaborate with

the other Finance Commission agencies on enhanced sharing opportunities as recommended

by Sunset Review.

Measure: Participate in the established workgroups and report the status and progress to the

Finance Commission on a semi-annual basis.

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Finance Commission Building, 2601 North Lamar Boulevard, Suite 201, Austin, Texas 78705

512-475-1350 (Phone), 512-475-1505 (Fax), www.sml.texas.gov

II. Regulatory Items

II.1 Objective: Continue to closely monitor the Department’s savings banks’ risk profiles

and the economic conditions in which they operate. Continue ongoing monitoring of both

individual and systemic conditions that present risks to their financial security through the

Department’s off-site financial information software and onsite presence

Measure: Maintain off-site monitoring program of savings banks while initiating appropriate

regulatory responses and enforcement actions when applicable. Maintain state savings bank

examination schedule as set by Department policy.

II.2 Objective: Continue compliance examinations of mortgage companies and Residential

Mortgage Loan Originators, licensed under Finance Code, Chapters 156 and 157,

respectively; to ensure that licensees are in compliance with applicable laws and regulations

when conducting business with Texas consumers. Analyze recurring examination findings

and take steps to communicate best practices to the mortgage industry.

Measure: Maintain mortgage examination schedule, as set by Department policy, and as

needed initiate appropriate regulatory responses and enforcement actions for violations

found.

II.3 Objective: Initiate appropriate regulatory enforcement to ensure compliance with federal

and state laws and regulations.

Measure: Report on enforcement actions.

II.4 Objective: Retain prompt resolution times on consumer complaints.

Measure: a. Provide updates to the Finance Commission on the aging of complaints.

b. Conduct management review of any complaints open over 120 days to identify issues

preventing the timely closing of such complaints.

c. Conduct consumer complaint surveys on a regular basis.

II.5 Process complete licensing applications and registrations in a timely manner.

Measure: a. Monitor the timeliness of licensing process.

b. Conduct survey of license applicants on a regular basis.

II.6 Objective: Participate in the development and implementation of home equity

interpretations.

Measure:

a. Continued involvement in meetings of the Home Equity Lending Working Group as it

develops recommended home equity rules and interpretations.

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b. Implement any rule and interpretations adopted by the Finance Commission and the

Credit Union Commission.

II.7 Objective: Remain active and involved at the national level on supervisory issues

affecting savings banks and the mortgage industry.

Measure: a. Maintain contact with state regulators from other states, regulatory associations (e.g.

ACSSS, CSBS, and AARMR), trade associations, (e.g. TBA, IBAT, TMBA, ATMP,

TLTA, and TAR), and federal regulators (e.g. CFPB, FDIC, FRB), in order to be aware

of events, decisions, other state and federal policies and other areas of actual and

potential impact on the Department’s regulatory functions or the industries. Take

proactive steps to respond as issues arise affecting the industries or supervisory duties.

b. Continue working with the FDIC and FRB, and other federal agencies as appropriate,

on examinations, supervision, and consumer complaint resolution issues. Monitor

federal rule writing activity and interpretations of existing statutes.

c. Report to the Finance Commission on interaction with federal agencies in all of the

above listed activities.

III. Policy and Rule Development

III.1 Objective: Conduct rule review of all rules related to mortgage licensing. Propose

necessary amendments to the rules as necessary.

Measure: Have final action taken, either readoption or repeal, on the rule review and

proposal of any amendments needed to these rules.

III.2 Objective: Monitor and modify Texas Administrative Code rules as necessary to reflect

changes in state and federal laws and address the dynamics of the changing industries.

Measure: Amend rules and adopt new rules as necessary to timely implement necessary

changes.

IV. Industry Outreach and Communication

IV.1 Objective: Communicate with regulated industries on matters of supervisory and

industry interest, including emerging issues, through a variety of means both virtual and in

person as deemed appropriate and efficient.

Measure: Provide regular updates to the Finance Commission regarding activities conducted

in these areas by reporting the number of communications sent and events participated in.

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V. Agency Operations

V.1 Objective: Recruit well qualified personnel, while seeking to broaden the Department’s

workforce diversity. Train and cross-train employees as needed to minimize knowledge loss

due to employee departure and to prepare for business needs due to changes in regulated

industries and/or technology. Provide and promote opportunities for professional

development through individual training plans.

Measure: Report on staffing activity, actions to retain staff, and turnover ratios to the

Finance Commission.

V.2 Objective: Meet or exceed 90% of the key performance measures within the

Department’s control. Strive to reduce deficiencies, if any, in the performance measures

outside the Department’s control. (See Attachment A for all Performance Measures)

Measure: Provide regular updates to the Finance Commission regarding performance

measures.

V.3 Objective: Implement improvements in business processes and internal controls in

response to evolving business needs, audit recommendations, and/or internal reviews.

Measure: Report on outcome of audits and implementation progress to Finance Commission

Audit Committee.

V.4 Objective: Monitor the Department’s budgeted and actual revenues, expenditures, and

reserve balances, as approved by the Finance Commission, in order to maximize the

responsiveness and flexibility allowed by the Department’s Self-Directed Semi-Independent

status. Make decisions relating to finances in a fiscally prudent manner.

Measure: Report to the Finance Commission Audit Committee on revenue and expenditure

variances to the budget at least quarterly.

V.5 Objective: Ensure information technology is kept current to maintain effectiveness and

quality of work product of the Department. Safeguard the integrity of data and information

technology networks and systems.

Measure: Report to the Finance Commission activities in this area.

V.6 Objective: Prepare for the deployment of the Centralized Accounting and

Payroll/Personnel System (CAPPS) Financials’ Core Modules: Asset Management, Accounts

Payable, General Ledger, and Purchasing, scheduled for September 2021.

Measure: Provide necessary information and documentation, perform tasks, and participate

in onboarding activities, as required by Comptroller of Public Account’s CAPPS Financials

Team and according to the Interagency Cooperation Contract for CAPPS Services between

the Texas Comptroller of Public Account and the Department of Savings and Mortgage

Lending.

20



V.7 Objective: Monitor emergencies, natural disasters, or pandemics as they relate to the

Department or its regulated industries.

Measure: Report to the Finance Commission activities in this area.

V.8 Objective: Continue to evaluate headquarters space and parking needs in collaboration

with the other Finance Commission agencies.

Measure: Report to the Finance Commission activities related to the relocation of the

agencies.

21

Department of Savings and Mortgage Lending Attachment AFY21 Performance Measures

01-01 Thrift Safety and Soundness FY21 Target FY20 TargetOutcome Measures (Annual)

Key 01 Percentage of State Chartered Savings Institutions Receiving Examination within the Required Timeframes 1 100% 100%Key 02 Percentage of Savings Institutions Classified Safe and Sound1 90% 90%

Non-Key 04 Percentage of State Chartered Savings Institution Applications Processed within Statutory Timeframes 1 100% 100%Output Measures (Quarterly)

Key 01 Number of State Chartered Savings Institution Examinations Performed1 16 21Non-Key 04 Number of State Chartered Savings Institution Applications Processed.2 10 10

Efficiency Measures (Annual)Non-Key 01 Assets Examined Per Examiner Day (in Millions) $ 92.0 $ 14.0Non-Key 02 Average Time (Business Days) to Complete Analysis of Quarterly Financial Data 7 7

Explanatory Measure (Annual)Key 01 Number of State-Chartered Savings Institutions 23 24Key 02 Dollar Amount of Assets under Regulation (in Billions) $ 325.5 $ 25.3

02-01 Mortgage RegulationOutcome Measures (Annual)

Key 01 Percentage of Satisfactory Levels of Compliance Reported Through Examination3 90% 90%Output Measures (Quarterly)

Key 01 Number of Applications Processed2 8,600 7,600Key 02 Number of Licensees Examined2 5,900 6,600

Efficiency Measures (Annual)Non-Key 01 Average Cost Per Application Processed $ 55 $ 55

Explanatory Measures (Annual)Non-Key 01 Total Number of Licensees in an Approved Status 38,000 35,000

03-01 Consumer ResponsivenessOutcome Measures (Annual)

Key 01 Percent of Complaints Completed within Ten Business Days of Receipt of Complete Information 99% 99%Key 02 Percentage of Written Complaints Closed within 90 Days2 95% 95%

Output Measures (Quarterly)Non-Key 01 Number of Complaints Closed2 1,000 1,000

Efficiency Measures (Annual)Non-Key 01 Average Cost Per Complaint Closed3 $ 400 $ 340

04-01 Agency AdministrationOutcome Measures (Annual)

Key 01 Percentage of Employees Separated from the Agency2 10% 10%02 Percentage of Actual Expenditures to Budgeted Expenditures 2 95% 95%

1 These measures are comparable to similar measures with the Department of Banking2 These measures are comparable to similar measures with the Department of Banking and Office of Consumer Credit Commissioner3 These measures are comparable to similar measures with the Office of Consumer Credit Commissioner

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Office of Consumer Credit Commissioner

Agency Priorities

FY 2021

1. LEGISLATIVE

1.1. 87th Legislative Session

1.1.1. Objective: Monitor legislation that affects industries regulated by the OCCC. Respond to new legislative issues and requests for information or testimony. Develop relationships with legislators and legislative staff. Review or draft legislation as appropriate.

Measure: Respond promptly to legislative requests for information. Provide regular weekly legislative reports to the Finance Commission.

1.2. Sunset Review.

1.2.1. Objective: Provide information requested by the Sunset Advisory Commission in its follow-up review of changes resulting from the Sunset Advisory Commission’s staff report and the OCCC’s Sunset legislation.

Measure: Provide requested information to Sunset staff. Provide updates on the Sunset review to the Finance Commission.

2. REGULATORY ACTIVITIES

2.1. Regulated Entities.

2.1.1. Objective: Supervise and monitor the jurisdictionally appropriate industry segments for compliance with state and federal law. Investigate illegal activity. Take appropriate enforcement actions to ensure compliance with state and federal law.

Measure: Reporting on compliance by regulated industry segment and enforcement actions.

2.1.2. Objective: Achieve overall weighted average acceptable level of compliance of 85% through examinations and industry education efforts. Monitor follow-up and restitution orders for licensees with outstanding examination issues.

Measure: Number of examinations completed. Report the rate of satisfactory compliance. Report the amount of restitution returned to consumers as a result of examinations.

2.1.3. Objective: Develop and refine the remote examination program including implementation of secure file transfer (FILR).

Measure: Report on the number of remote examinations completed.

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2.2. Licensing.

2.2.1. Objective: Process 90% of license applications within 60 days from received date to completion date. Provide professional development and training opportunities to licensing staff once per quarter.

Measure: Report on license activities, benchmarks, application processing status, and departmental professional development.

3. POLICY AND RULE DEVELOPMENT

3.1.Rulemaking.

3.1.1. Objective: Complete rule reviews for the following rule chapters: 7 TAC Chapter 7 (relating to the Texas Financial Education Endowment Fund), Chapter 84 (relating to Motor Vehicle Sales Finance), and Chapter 89 (relating to Property Tax Lenders). Work with stakeholders to clarify and improve rules.

Measure: Present rules to the Finance Commission for readoption according to schedule. Propose appropriate rule amendments to the Finance Commission. Request feedback from stakeholders on whether rules should be updated, and conduct webinars on proposed rule amendments.

3.1.2. Objective: Prepare any rule proposals necessary to implement 2021 legislation. Work with stakeholders to seek feedback on proposed rules.

Measure: Present rules to the Finance Commission for proposal and adoption. Request feedback from stakeholders and conduct webinars on proposed rules.

4. CONSUMER ISSUES / COMMUNICATION & OUTREACH STRATEGIES

4.1 Texas Financial Education Endowment Fund (TFEE).

4.1.1. Objective: Manage the TFEE 2020-2021 grant cycle, including monitoring grant award recipients, reporting on grant award program progress, and process reimbursement requests. Promote TFEE for the 2022-2023 grant cycle, review procedures, and receive grant applications for review.

Measure: Reporting on fund activities, investment earnings, grant request submissions, grants awarded, and grantee reporting highlights. Identify and implement ways in which to improve and expand the grant program based on report findings and program needs.

4.2 Financial Education

4.2.1. Objective: Identify underserved populations and locations in need of financial education. Provide financial education to new demographics of consumers by collaborating with community organizations, state agencies, non-profit organizations, and consumer advocacy groups. Collaborate with the Department of Banking in the promotion and

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delivery of financial education. Expand financial education content online by remote learning and webinar techniques.

Measure: Report on number of people and programs reached.

4.3. Industry and Stakeholder Outreach

4.3.1. Objective: Continue to build relationships with industry and interested stakeholders to ensure clear communications on education or regulatory compliance. Monitor emerging issues in agency’s areas of regulation and communicate the impact to regulated and licensed entities. Develop publications that address topics of interest and share with regulated and licensed entities. Participate in or attend industry meetings or seminars.

Measure: Report to the Finance Commission on the content and frequency of communications.

5. AGENCY MANAGEMENT

5.1. Performance Measures.

5.1.1. Objective: Performance Targets. Meet or exceed 80% of key performance targets within ±5% of the projected target.

Measure: Continue to meet or exceed the strategic planning goals for key performance measures, including attainment of at least 9 out of 11 key performance targets. Report results to Finance Commission on a quarterly basis.

5.2. Human Resources.

5.2.1. Objective: Recruit and retain qualified personnel with the appropriate skill set necessary to meet short and long-term needs. Continue efforts to right size staffing, based on performance requirements, with an emphasis on employee retention and diversity. Ensure staff receives adequate cross-training to minimize institutional knowledge loss due to work separation or retirement. Maintain competitive compensation schedules. Continue efforts to be proactive in competitive salary administration.

Measure: Report on turnover ratio, cross-training initiatives and retention efforts. Maintain competitive financial examiners career development and progression path.

5.2.2. Objective: Promote opportunities for staff professional development. Ensure that examiners and investigators receive a minimum of 40 hours of continuing education. Ensure that at least 40% of administrative staff receives additional professional or job-related training.

Measure: Reporting on training opportunities and attainment of minimum exam staff training and administrative staff training.

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5.2.3. Objective: Conduct review of Human Resources policies and update as appropriate. Enhance supervisory resources and training.

Measure: Report on completion of review and progress on supervisor resources.

5.3. Financial and Self-Directed, Semi-Independent Status.

5.3.1. Objective: Ensure that the agency’s revenues and expenditures are appropriate and balanced and maintain a cash reserve or fund balance in compliance with Finance Commission policies. Provide greater data reliability, more efficient transactional processing, and enhanced reporting.

Measure: Review internal financial statements and variances on a monthly basis. Submit quarterly financial data relating to the agency’s financial position and fund balance for review by the Finance Commission.

5.3.2. Objective: Transition to the Centralized Accounting Payroll/Personnel System (CAPPS) for the financial module.

Measure: Report on activities related to CAPPS transition and implementation.

5.3.3. Objective: Continue to work towards a long term solution, in collaboration with the other Commission agencies, to address headquarter facilities space and parking needs.

Measure: Report on activities related to the relocation of the Finance Commission agencies.

5.4. Information Technology.

5.4.1. Objective: Software Modernization and Continuous Improvement. Ongoing enhancements to the Application, Licensing, Examination, Compliance System (ALECS), improving functionality and security. Consolidation of agency services to one internal directory.

Measure: Reporting on development and milestones.

5.4.2 Objective: Hardware Modernization. Updating and maintaining the OCCC endpoint computer asset deployment and the shared network equipment, with focus on provisioning dispersed workforce as a result of pandemic protocols.

Measure: Reporting on milestones and distribution.

5.4.3 Objective: Increase Agency Security Posture. Using the recommendations provided in the FY19 cybersecurity assessment, OCCC will increase security maturity for objectives in the Texas Cybersecurity Framework.

Measure: Activity reporting on the roadmap with timelines for implementation of recommendations.

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5.4.4 Objective: Formal Change Management Procedure. Continued use and improvement of the agency’s change management procedure, including consistent, collected documentation.

Measure: Reporting of change request documentation metrics and summaries.

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FY 21 Performance Measures FY 21 Target FY 20 Target

Office of Consumer Credit Commissioner

Consumer Protection: Outcome Measures (Annual) Key Monies returned to consumers $2,500,000 5,000,000 Key Percentage of written complaints closed within 90 days1 85% 85% Key Percentage of examinations reporting acceptable level of compliance2 85% 85%

Percentage of licensed locations and registered offices examined annually 15% 20% Percentage of repeat referrals for enforcement action 13% 13% Percentage of enforcement actions closed within targeted timeframe 70% 70%

Output Measures (Quarterly) Key Number of complaints closed1 1750 1800 Key Number of examinations completed1 2500 4000

Number of investigations completed 55 80 Number of enforcement actions taken 275 275 Number of contested cases heard at SOAH 5 5 Number of compliance aids and tools published 45 45 Number of industry stakeholder and outreach events hosted or attended by

30 30 O CCC staff

Efficiency Measures (Annual) Average number of days for all complaints to reach final disposition 60 60 Average number of days to close a complaint 45 45 Average cost per complaint2 $180 $275 Average cost per examination $1,725 $1,250

Key Average number of days to close an enforcement action 100 100

Effective Licensing & Registration: Outcome Measures (Annual) Key Percentage of business license applications processed within 60 days 90% 90%

Output Measures (Quarterly) Key Number of business applications processed1 1750 1750

Number of pawnshop employee license applications processed 600 900 Number of residential mortgage loan originator licenses processed1 60 60

Efficiency Measures (Annual) Key Average processing time (days) for business license applications 45 45

Average processing time (days) for pawnshop employee applications 30 30 Average processing time (days) for residential mortgage loan originators 15 15

Efficient and Effective Agency Operation: Outcome Measures (Annual) Key Percentage of regular employees separated from the agency1 16% 16%

Percentage of public information requests addressed within 5 business days 80% 80% Percentage of actual expenditures to budgeted expenditures1 95% 95%

Output Measures (Quarterly) Number of public information requests closed 185 185 Number of public information requests withdrawn 10 10

Efficiency Measures (Annual) Average number of days to address a public information request 2.6 2.6

Explanatory Measures (Annual) Number of public information requests received 200 200

Financial Education: Output Measures (Quarterly) Key Number of people receiving direct educational services 775 325

Percentage of TFEE award recipients who reached their consumer 100 100 participation goal within the grant period

1 These measures are comparable to similar measures with the Departments of Banking and Savings and Mortgage Lending 2 These measures are comparable to similar measures with the Department of Savings and Mortgage Lending

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M E M O R A N D U M

TO: The Finance Commission FROM: Charles G. Cooper, Commissioner DATE: August 5, 2020 RE: Department of Banking Priorities for Fiscal Year 2021

I. LEGISLATIVE – State and National Legislative Issues

I.1 Objective: Provide appropriate and comprehensive resource material as requested in a timely manner.

Measure: To the extent legally permissible, respond accurately and timely to all requests for resource information. Maintain contact with legislative committee chairs and staff. Testify at hearings as requested.

I.2 Objective: Maintain accurate, timely, and complete communication with Finance Commission members about significant state and federal legislative issues as well as conditions, trends, and significant events in the industries the agency supervises.

Measure: Notify Finance Commission members of state legislature committee hearings, actions, and other items of interest on a timely basis. Keep members informed of significant federal laws and policy statements and how supervised entities are affected. Provide sufficient information and materials to give Finance Commission members an overall assessment of our regulated industries.

I.3 Objective: Monitor state legislation that may affect the Department or its regulated entities. Make recommendations for state legislative changes to address areas that the law does not adequately address, correct technical errors, and modernize outdated statutes.

Measure: Monitor interim charges and aid legislative committees if requested. Provide proposals for legislative improvements if requested by legislative committees. Monitor legislation and provide technical assistance and comprehensive resource materials when requested. Begin implementation of any legislation that directly affects the Department or the industries we regulate.

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Memorandum to Finance Commission Page 2

2601 N. Lamar Blvd., Austin, Texas 78705 www.dob.texas.gov

I.4 Objective: Implement Sunset “Management Actions” approved by the Sunset Commission.

Measure: Continue with implementation of the Finance Commission’s Plan to minimize duplication of agency functions and promote more cost-efficient administration of the finance agencies. Coordinate these efforts with the other finance agencies.

II. REGULATORY ACTIVITIES – Examination Activity and Enforcement Actions

II.1 Objective: Efficiently structure the agency to meet performance measures. Ensure performance goals are a true evaluation of major functions of the Department (See Attachment A for all performance measures).

Measure: Continue to meet or exceed the strategic planning goals for performance measures. Maintain banking accreditation and obtain the inaugural MSB accreditation from CSBS. Quarterly, report results to the Finance Commission.

II.2 Objective: Remain active and involved at the national level in supervisory issues affecting banking, money services business activities, trust services and other areas of direct supervisory oversight in Texas.

Measure: Maintain active contact with other states individually and through regulatory associations (CSBS and MTRA), trade associations (IBAT and TBA) and frequent contact with federal regulators to be aware of events, decisions, other state and federal policies, and other areas of actual or potential impact to the Department’s regulatory functions or the industry. Continue to participate in the networked supervision and examination of MSBs licensed in multi-states. Take proactive steps to respond as issues arise affecting the industries or our supervisory duties.

II.3 Objective: Maintain an ongoing awareness of our bank and trust entities’ risk profiles and the condition of the economy in which they operate. Continue ongoing monitoring of individual or systemic conditions, including the economic effects of the COVID-19 pandemic, cybersecurity threats and other high-risk activities which present risks to their financial stability. Monitor and take necessary actions against institutions exhibiting unacceptable risk profiles.

Measure: Perform research, maintain ongoing dialogue with other regulators, and attend training to maintain an understanding of conditions in which our entities operate. Maintain a leading role in the effort to combat cybersecurity threats. Maintain an off-site monitoring program of bank and trust industries while initiating appropriate regulatory responses and actions when applicable. Research and take required actions against institutions with unacceptable risk profiles to minimize the adverse impact on depositors, shareholders, and the banking system in general. Maintain a current bank watch list reflecting entities with a heightened risk of becoming in troubled condition.

II.4 Objective: Monitor emerging issues in our areas of regulation. Determine and communicate the impact of these issues to the regulated entities. Monitor the effects of

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http://www.dob.texas.gov/



COVID-19 on our regulated entities and ensure that supervisory activities remain appropriate and effective.

Measure: Report on emerging issues to the Finance Commission and regulated entities. Provide publications that address topics of interest. Participate in industry meetings, seminars, committees and working groups. Continue to be involved in speaking opportunities with regulated industries to provide updates relating to ongoing supervisory issues.

II.5 Objective: Monitor areas/industries we regulate for illegal activity.

Measure: Monitor for and investigate illegal activity, and when necessary, initiate appropriate regulatory enforcement actions against licensed and/or unlicensed entities to ensure compliance with applicable statutes and rules to protect the rights and interests of consumers. Refer cases as needed to local, state, or federal law enforcement agencies or the Texas Attorney General.

II.6 Objective: Process consumer complaints/inquiries professionally, appropriately, and timely.

Measure: Periodically report to the Finance Commission on the complaints/inquiries received and processed.

II.7 Objective: Continue to develop and refine examination procedures, reference materials, and internal guidance to enhance the examination process.

Measure: Monitor regulatory changes and update examination materials and guidance in a timely manner. Perform internal reviews of examination procedures to ensure proper intent and applicability. Timely and regularly communicate updates/changes to examiners. Continue to make examination procedure and process modifications in response to COVID-19.

III. POLICY AND RULE DEVELOPMENT – Policies, Rules and Financial Education Activities

III.1 Objective: Issue formal communications to regulated entities to clarify and/or promote best practices to assist in complying with laws and policy statements.

Measure: Issue Supervisory Memorandums, Regulatory Guidance, and Legal Opinions in a timely manner as needed.

III.2 Objective: Monitor and suggest amendments to the Texas Administrative Code as necessary to reflect changes in state and federal laws, clarify existing laws, and address the dynamics of the changing industries. Perform periodic reviews of fee rules to ensure each regulated area covers its cost of regulation.

Measure: Draft amendments and new rules for potential adoption by the Finance Commission as necessary to timely effect necessary. Conduct reviews of all rules every four years to evaluate their continued necessity and applicability.

III.3 Objective: Maintain participation in financial education and outreach efforts.

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Measure: Maintain and periodically update the Department’s financial education web pages and brochure. Highlight financial institutions with active programs in agency publications. Participate in financial education events or committees when possible.

IV. AGENCY MANAGEMENT – Staffing, Recruiting, Fiscal Responsibility, and Technology

IV.1 Objective: Actively recruit qualified personnel while strengthening the diversity of the workforce whenever possible. Maintain compliance with all state and federal employment laws.

Measure: Actively recruit entry level positions at state universities and colleges by attending job fair events (if available) and supporting banking programs at Texas universities. Utilize recruiting platforms that reach a wide talent pool. Promptly post vacancies. Periodically review and update personnel policies and procedures.

IV.2 Objective: Strive to attain full staffing, with an emphasis on employee retention and staff diversity. Promote junior staff involvement in new responsibilities to better enable seamless transition into senior staff positions as vacancies occur. Continue efforts to maintain a competitive salary structure. Obtain feedback from employees and the Employee Advisory Council and implement changes where feasible.

Measure: Continue to improve examination staff retention by addressing major issues that contribute to non-retirement resignations, with a goal to have the agency turnover rate (excluding retirements and intern separations) not exceed 9% for the fiscal year. Maintain a competitive examiner salary program compared to the FDIC by striving to be at a 95% equivalency. Implement, when feasible, recommendations of the Employee Advisory Council.

IV.3 Objective: Have up-to-date computer hardware and software to enhance the effectiveness, speed and quality of the work products that are compatible with our federal counterparts. Provide timely technical support to staff.

Measure: Provide technology tools necessary for staff to perform their job functions efficiently, effectively, and securely. Where appropriate, provide technology solutions that support department wide remote work for an extended period of time in accordance with agency determined limitations. Ensure network, website, and databases function appropriately and without prolonged downtimes.

IV.4 Objective: Safeguard the integrity of data and information technology networks and systems from unauthorized access or use and ensure that access to critical systems by employees are available during an emergency.

Measure: Perform an annual external information security risk assessment and initiate corrective actions to maintain data integrity and minimize the risk of unauthorized access or use. Continue periodic intrusion testing by the Department of Information Resources for both the network and external facing web resources. Conduct an annual

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test of the Department’s disaster recovery plan and initiate corrective actions to ensure operations will function appropriately.

IV.5 Objective: Ensure financial examiners receive adequate and proper training to perform their duties and progress within the financial examiner series.

Measure: Provide core required training courses to financial examiners in the FE I – FE III series so they can progress in the financial examiner series. Adequately prepare assistant examiners to pass the Bank and Trust Supervision commissioning test. Continue agency efforts to provide continuing education to Bank and Trust Supervision commissioned examiners as well as Non-Depository Supervision examiners.

IV.6 Objective: Ensure agency expenditures are necessary and prudent and within budgetary constraints; revenues collected are adequate to cover expenditures; and provide a cash reserve or fund balance that complies with Finance Commission policies.

Measure: Review expenditure and revenue patterns monthly. Prepare quarterly financial statements to substantiate the agency’s financial position and cash reserve.

IV.7 Objective: Periodically review internal controls and processes to improve the efficiency and effectiveness of the agency.

Measure: Report on improvements identified and implemented.

IV.8 Objective: Continue to explore options for physical relocation of the Finance Commission agencies that meets the needs of all three agencies.

Measure: Report on activities related to the relocation of the Finance Commission agencies.

IV.9 Objective: Comply with the directives of the State Office of Risk Management (SORM) regarding the Continuity of Operations Plan.

Measure: Ensure that updates are made, and the Plan is exercised as determined by SORM.

As Commissioner, my overriding objective continues to be for the Banking Department to be considered the top financial regulator by the industries we regulate, as well as our regulatory peers and counterparts, and the top employer by our personnel. The culmination and achievement of these goals will help achieve this objective.

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Performance Measures for 2021 Department of Banking

Target Target Bank and Trust: 2021 2020 K Outcome Measures (Annual) K 01-01.01 Percentage of Banks Receiving Examinations Within Required Timeframes 1

01-01.02 Percentage of Foreign Bank Organizations Receiving Examinations Within Required Timeframes 01-01.03 Percentage of Trust Companies Receiving Examinations Within Required Timeframes 01-01.04 Percentage of Problem Institutions with Appropriate Supervisory Actions in Place 01-01.05 Certificate of Accreditation by CSBS Maintained in Good Standing

95.00% 95.00% 70.00% 100.00% 85.00% 90.00%

100.00% 100.00% YES YES

K Output Measures (Quarterly) K 01-01.06 Number of Bank Examinations Performed 1 K 01-01.07 # Foreign Bank Organization, Trust Co, Trust Dept, & IT Exams and Other Specialized Reviews Performed

89 90 197 185

Efficiency Measures (Annual) 01-01.08 Average Cost Per Bank Examination

Average Cost Per Bank Examination 01-01.09 Assets Examined Per Examiner Day (in millions)

Assets Examined Per Examiner Day (in millions)

$98,380.00 $88,700.00

$10.95 $9.00

K Explanatory Measure (Annual) K 01-01.10 Percentage of Banks Classified Safe and Sound 1

01-01.11 Number of Texas State-Chartered Banks 01-01.12 Total Assets in Texas State-Chartered Banks (in Billions)

95.00% 95.00% 207 218

$319.60 $285.00

Non-Depository Supervision (NDS): K Outcome Measures (Annual) K 01-02.01 Percentage of Money Services Business Licensees Examined By NDS Within Required Timeframes K 01-02.02 Percentage of Prepaid Funeral Contract Licensees Examined By NDS Within Required Timeframes K 01-02.03 Percentage of Perpetual Care Cemetery Licensees Examined By NDS Within Required Timeframes

01-02.04 Percentage of PCC and PFC Applications Processed within Statutory Period

90.00% 90.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00%

K Output Measures (Quarterly) K 01-02.05 Number of NDS Licensees Examined 2 550 550

Efficiency Measures (Annual) Average Direct Cost Per Prepaid Funeral Contract and Perpetual Care Cemetery 01-02.06 Licensee Examination.

01-02.07 Average Direct Cost Per Money Services Business Licensee Examination

$2,750 $2,750

$9,500 $9,500 Explanatory Measures (Annual)

01-02.08 Dollar Amount of Prepaid Funeral Contracts in Force (in Billions) 01-02.09 Number of NDS Licensees 01-02.10 Percentage of NDS Licensees Classified Safe and Sound

$4.3 $4.2 760 750

95.00% 95.00%

Application Processing: K Outcome Measures (Annual)

Percentage of Applications and Notices for Banks, Trust Companies, Money Service Businesses, and Check K 01-03.01

Verification Companies Processed within Statutory Time Periods 1 95.00% 95.00%

K Output Measures (Quarterly) Number of Applications and Notices Processed for Banks, Trust Companies, Money Service Businesses, and

K 01-03.02 Check Verification Companies 2

298 311

K Outcome Measures (Annual) K 01-04.01 Percentage of Written Complaints Closed Within 90 Days 2 100.00% 100.00%

Output Measures (Quarterly) 01-04.02 Number of Written Complaints Closed 2 225 370

Regulatory Oversight: (Finance Commission) (Reported Internally) Output Measures (Quarterly)

01-04.03 Number of Meetings Convened 6.0 6.0

Operational Efficiency: K Outcome Measures (Annual) K 01-05.01 Percentage of Regular Employees Separated from the Agency 2

01-05.02 Percentage of Regular Employees Separated from the Agency (Excluding Retirements) K 01-05.03 Percentage of Actual Expenditures to Budgeted Expenditures 2

11.00% 11.00% 9.00% 9.00% 95.00% 95.00%

1 These measures are comparable to similar measures with the Department of Savings and Mortgage Lending 2 These measures are comparable to similar measures with the Department of Savings and Mortgage Lending and Office of Consumer Credit Commissioner

Attachment A

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http:01-05.03http:01-05.02http:01-05.01http:01-04.03http:01-04.02http:01-04.01http:01-03.02http:01-03.01http:01-02.07http:01-02.06http:01-02.05http:01-02.04http:01-02.03http:01-02.02http:01-02.01http:01-01.12http:01-01.11http:01-01.10http:01-01.07http:01-01.06http:01-01.05http:01-01.04http:01-01.03http:01-01.02http:01-01.01

8 . Discussion of and Possible Vote to Take Action on the Adoption of Amendments

to 7 TAC §155.2, Concerning Payoff Statement Form.

PURPOSE: Section 155.2 governs the requirements for a loan servicer to issue a

home loan payoff statement form in response to a request from a title company. The

amendments, if adopted, would require a loan servicer, when issuing a payoff

statement, to recite the loan number for the loan, or if that information is not

available, the original amount of the loan. The amendments are designed to limit

the provision of erroneous payoff information when a loan servicer misidentifies

the loan for which the payoff statement is meant to be provided. The title of the

Subchapter is also updated to better reflect its subject matter. Other modernization

changes are made to update the rule and improve readability.

This rulemaking action relates to a previous rule proposal concerning 7 TAC §155.2

published for comment in the January 3, 2020 issue of the Texas Register (45

TexReg 162). Specifically, the amendments incorporate proposed revisions

received during the public comment period for the initial rule proposal.

RECOMMENDED ACTION: No comments were received in response to the

rule proposal. The Department, on behalf of the Joint Financial Regulatory

Agencies, recommends that the Finance Commission approve adoption of the

amended rule, without changes to the proposed text as published in the July 3, 2020

issue of the Texas Register.

RECOMMENDED MOTION: I move that we adopt the amendments to 7 TAC

§155.2 without changes to the proposed text as previously published in the Texas

Register.

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ADOPTION OF AMENDMENTS

7 TAC §155.2

PAGE 1 OF 3

Title 7. Banking and Securities

Part 8. Joint Financial Regulatory

Agencies.

Chapter 155. Payoff Statements.

Subchapter A. Registration.

7 TAC §155.2. Payoff Statement Form.

The Finance Commission of Texas

(commission), on behalf of the Department of

Savings and Mortgage Lending (SML), the

Office of the Consumer Credit Commissioner

(OCCC), and the Texas Department of

Banking (DOB; SML, OCCC, and DOB,

collectively, the "joint financial regulatory

agencies"), adopts amendments to existing

Title 7 Texas Administrative Code (TAC),

Part 8, Chapter 155, Subchapter A, §155.2,

without changes to the text as published in the

July 3, 2020 issue of the Texas Register (45

TexReg 4454).

EXPLANATION OF AND

JUSTIFICATION FOR THE RULE

7 TAC, Chapter 155 contains the

administrative rules of the joint financial

regulatory agencies concerning requirements

for the creation and delivery of payoff

statements for home loans. The amendments

arose in part from the joint financial

regulatory agencies’ periodic review of

Chapter 155, conducted pursuant to

Government Code, §2001.039. The

commission, determining that the reasons for

initially adopting the rules contained in

Chapter 155 continued to exist, readopted

such rules in the January 3, 2020 issue of the

Texas Register (45 TexReg 162). While

readopting the rules, the commission

contemporaneously proposed amendments to

7 TAC §155.2 (45 TexReg 33). The

amendments proposed at that time were

limited to non-substantive formatting

changes to reconcile differences between the

form published on SML’s website and the

form embedded in §155.2. However, during

the period for public comment to such

proposal, the joint financial regulatory

agencies received one comment submitted by

the Texas Land Title Association

(commenter) requesting that the payoff

statement form be revised to include

additional information. Specifically, the

commenter requested that, in order for the

title company to more easily verify the loan

servicer has correctly identified the loan for

which the payoff statement was requested,

the payoff statement form state the loan

number assigned for identification purposes,

or if the loan number is not available, the

original loan amount. The joint financial

regulatory agencies determined the comment

and proposed revisions had merit and that the

revisions should be considered by the

commission for potential adoption. The joint

financial regulatory agencies further

determined that the revisions would be best

achieved by amending the rule to impose the

requirement within the actual text of the rule,

in addition to making corresponding changes

to the form embedded in the rule. Given the

revisions made substantive changes to the

text of the rule and to the form embedded in

the rule beyond the non-substantive

formatting changes initially proposed, the

joint financial regulatory agencies

determined it would be prudent to republish

the rule as a new rule proposal for public

comment. The initial January 3, 2020

proposal was withdrawn at the same time the

second proposal affecting the rule was

published in the Texas Register (45 TexReg

4497). The amendments adopted effectuate

the revisions suggested by the commenter, in

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7 TAC §155.2

PAGE 2 OF 3

addition to the non-substantive formatting

amendments proposed in the initial January

3, 2020 proposal.

SUMMARY OF PUBLIC COMMENTS

Publication of the joint financial regulatory

agencies’ proposal to amend 7 TAC §155.2

recited a deadline of 30 days to receive public

comments, or August 2, 2020. A public

hearing in accordance with Government

Code §2001.029 was not required. No

comments were received in response to the

proposal.

STATUTORY AUTHORITY

Amended 7 TAC §155.2 is adopted under the

authority of, and to implement, Finance Code

§343.106(b), which requires the commission

to adopt rules governing requests by title

insurance companies for payoff information

from mortgage servicers related to home

loans and the provision of that information,

including rules prescribing a standard payoff

statement form that must be used by

mortgage servicers to provide payoff

statements.

The adoption of amended 7 TAC §155.2

affects the statutes contained in Finance

Code, Chapter 343.

Subchapter A. Form and Delivery [Registration].

§155.2. Payoff Statement Form.

(a) Requests made pursuant to this chapter shall

be in writing and submitted to the mortgage

servicer by mail, email [electronic mail], or fax

[facsimile]. If the mortgage servicer has

designated a specific mailing [physical] address,

[;] email [electronic mail] address, fax number,

[;] and/or a specific representative to receive

requests made pursuant to this chapter, then

requests shall be submitted in accordance with

such designation. Requests for a payoff statement

shall, at a minimum, include the following:

(1) - (3) (No change.)

(b) Upon receipt of a valid request made under

subsection (a) of this section, a mortgage servicer

shall provide, in writing, by mail or email

[electronic mail], the payoff statement

information for the home loan specified in the

request which must be provided on the prescribed

payoff statement form, Figure 7 TAC

§155.2(c)(6), or in a substantially similar format

which contains all elements not indicated as

optional on the prescribed payoff statement form.

The statement must include the following

information:

(1) - (2) (No change.)

(3) Sufficient information to identify the

loan for which the payoff information is

provided, including:

(A) the loan number, if available;

or

(B) the original amount of the

loan, if the loan number is not available.

(c) If applicable, the payoff statement may

contain:

(1) - (5) (No change.)

(6) Other information necessary to

provide a clear and concise payoff statement.

Figure: 7 TAC §155.2(c)(6) [Figure: 7 TAC

§155.2(c)(6)]

Certification

The agency certifies that legal counsel has

reviewed the proposal and found it to be

37


7 TAC §155.2

PAGE 3 OF 3

within the state agency’s legal authority to

adopt.

Iain A. Berry

Associate General Counsel

Department of Savings and Mortgage

Lending

38

Figure: 7 TAC § 155.2(c)(6)

PAYOFF STATEMENT FORM

LEGAL NOTICES

TEXAS FINANCE CODE § 343.106 REQUIRES PAYOFF STATEMENT CONTAIN CLOSING DATE AND DATE THROUGH WHICH PAYOFF AMOUNT IS VALID. THESE REQUIREMENTS CANNOT BE DELETED FROM PAYOFF STATEMENT.

TEXAS FINANCE CODE § 343.106 REQUIRES THE IMPLEMENTING RULE TO ALLOW MORTGAGE SERVICERS AT LEAST SEVEN (7) BUSINESS DAYS FROM THE DATE OF RECEIPT OF PAYOFF

REQUEST TO RESPOND TO A REQUEST MADE UNDER THE STATUTE. ANY AMOUNT HELD IN ESCROW AT CLOSING WILL BE SETTLED IN ACCORDANCE WITH APPLICABLE FEDERAL LAW.

Name of Mortgage Servicer _____________________ REQUEST DATE: ___/___/______ Name of Representative __________________________ Street or E-mail Address __________________________ SENT BY: Mail E-mailCity, State, Zip Code __________________________ Facsimile

LOAN INFORMATION

MORTGAGOR:

COLLATERAL:

LOAN NUMBER:

___________________ NEXT PAYMENT DUE DATE: ___/___/____

___________________ LOAN TYPE: ___________

___________________ ORIGINAL LOAN AMOUNT: ___________

AMOUNT DUE THIS STATEMENT REFLECTS THE TOTAL AMOUNT DUE UNDER THE TERMS OF THE NOTE/SECURITY INSTRUMENT THROUGH THE CLOSING DATE WHICH IS ___/___/______. If this obligation is not paid in full by this date, then you should obtain from us an updated payoff amount before closing.

Total Principal, Interest, and other amounts due under the Note/Security Instrument: Unpaid Principal Balance: $ _________________ Interest through ___/___/______ $ _________________ Less Reductions in amount due $ _________________ ________________________ $ _________________ ________________________ $ _________________ ________________________ $ _________________ ________________________ $ _________________

TOTAL AMOUNT DUE: $ _________________

WHERE TO SUBMIT PAYOFF FUNDS

WIR

E TR

AN

SFER

Beneficiary Name: ______________ __________________

OV

ERN

IGH

T M

AIL

Attention: _______________ Beneficiary/Receiving Bank: __________________ Company: _______________ Beneficiary Bank ABA: __________________ Address: _______________ Beneficiary Bank Account: __________________ ________________________ Special Information to Beneficiary: __________________ ________________________ ____________________________________________________________

____________________________________

________________________

39

OPTIONAL SECTIONS ORIGINAL LOAN AMOUNT: This is an Adjustable Rate Mortgage. Under the terms of this loan the next Change Date for the interest rate charged is ___/___/______. We will only issue a payoff good through the next Change Date. If the closing date is past the next Change Date an updated Payoff Statement from us will be required. If loan has quotable per diem interest, then “Funds received after ___/___/______ will be subject to an additional $_________________ of interest per day.” FUNDS MUST BE RECEIVED BY ____________________ FOR SAME-DAY PROCESSING. PAYOFFS ARE NOT POSTED ON WEEKENDS OR HOLIDAYS. INTEREST WILL BE ADDED TO THE ACCOUNT FOR THESE DAYS. NOTE: This Note/Security Instrument is due for payment on ___/___/______. If payment is not received within ________________ days of the current payment due date, a late charge of $___________ will be assessed. Please add that amount to the payoff total. Escrow Disbursement Amounts & Dates: Description(s): Amount(s) Held: Next Disbursement Date(s): __________________ $__________________ __________________________ __________________ $__________________ __________________________ __________________ $__________________ __________________________

Release of Lien Processing:

40

A. FINANCE COMMISSION MATTERS 9. Discussion of and Possible Vote to Take Action on the Readoption of

7 TAC, Part 8, Chapter 151, Concerning Home Equity Lending Procedures, Chapter 152, Concerning Repair, Renovation, and New Construction on Homestead Property, and Chapter 153, Concerning Home Equity Lending, Resulting from Rule Review

PURPOSE: Pursuant to Texas Government Code, §2001.039, the Joint Financial Regulatory Agencies have completed the review of 7 TAC Chapters 151, 152, and 153, and believe that the reasons for initially adopting the rules contained in these chapters continue to exist. RECOMMENDED ACTION: The Joint Financial Regulatory Agencies request that the Finance Commission readopt 7 TAC Chapters 151, 152, and 153 following rule review, because the reasons for the rules continue to exist. RECOMMENDED MOTION: I move that we readopt 7 TAC Chapters 151, 152, and 153 following rule review, because the reasons for the rules continue to exist.

41

READOPTION FROM RULE REVIEW 7 TAC CHAPTERS 151, 152, AND 153

Page 1 of 1 Title 7. Banking and Securities Part 8. Joint Financial Regulatory Agencies Chapter 151. Home Equity Lending Procedures Chapter 152. Repair, Renovation, and New Construction on Homestead Property Chapter 153. Home Equity Lending The Finance Commission of Texas and the Texas Credit Union Commission (commissions) have completed the rule review of the following chapters in Texas Administrative Code, Title 7, Part 8, in their entirety: Chapter 151, concerning Home Equity Lending Procedures; Chapter 152, concerning Repair, Renovation, and New Construction on Homestead Property; and Chapter 153, concerning Home Equity Lending. The rule review was conducted under Texas Government Code, §2001.039. Notice of the review of 7 TAC Chapters 151, 152, and 153 was published in the Texas Register on May 1, 2020 (45 TexReg 2897). The commission received no comments in response to that notice. The commissions believe that the reasons for initially adopting the rules contained in these chapters continue to exist. Before publishing notice of the review in the Texas Register, the Joint Financial Regulatory Agencies (Texas Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Texas Credit Union Department) issued an informal advance notice of the rule review to stakeholders. The agencies received six informal precomments in response to the advance notice. The agencies appreciate the thoughtful input provided by stakeholders. As a result of stakeholder input and internal review by the agencies, the commissions have determined that certain revisions are appropriate and necessary in 7 TAC Chapters 151 and 153. Those proposed changes are published elsewhere in this issue of the Texas Register. As a result of the rule review, the commissions find that the reasons for initially adopting the rules in 7 TAC Chapters 151, 152, and 153 continue to exist, and readopt these chapters in accordance with the requirements of Texas Government Code, §2001.039.

42

A. FINANCE COMMISSION MATTERS 10. Discussion of and Possible Vote to Take Action on the Proposal of

Amendments, a New Rule, and a Repeal in 7 TAC, Part 8, Chapter 151, Concerning Home Equity Lending Procedures, and Chapter 153, Concerning Home Equity Lending, Resulting from Rule Review.

PURPOSE: The purpose of the amendments to 7 TAC Chapters 151 and 153 is to implement changes resulting from the commission's review of the chapters under Texas Government Code, §2001.039. RECOMMENDED ACTION: The Joint Financial Regulatory Agencies request that the Finance Commission approve the amendments to 7 TAC Chapters 151 and 153 for publication in the Texas Register. RECOMMENDED MOTION: I move that we approve for publication and comment the amendments, new rule, and repeal in 7 TAC Chapters 151 and 153.

43

PROPOSED AMENDMENTS, NEW RULE, AND REPEALS 7 TAC CHAPTERS 151 AND 153

Page 1 of 14 Title 7. Banking and Securities Part 8. Joint Financial Regulatory Agencies Chapter 151. Home Equity Lending Procedures Chapter 153. Home Equity Lending 7 TAC, Part 8, Chapter 151 Department. The agencies distributed an early precomment draft of proposed changes The Finance Commission of Texas and to interested stakeholders for review, and the Texas Credit Union Commission then held an online webinar regarding the ("commissions") propose amendments to proposed changes. The agencies received §151.1 (relating to Application for three informal precomments on the rule text Interpretation); and propose the repeal of draft. The agencies appreciate the thoughtful §151.2 (relating to Review of Request), input provided by stakeholders. §151.3 (relating to Initiation of Interpretation Procedure), §151.4 (relating to Notice of Proposed amendments to §151.1 would Proposed Interpretation), §151.5 (relating to amend current procedures for stakeholders to Public Comment), §151.6 (relating to Action request interpretations of Section 50 from the on Proposed Interpretation), and §151.7 commissions. Proposed amendments to (relating to Adoption of Interpretation) in 7 §151.1 would also specify that the TAC, Chapter 151, concerning Home Equity commissions will propose and adopt Lending Procedures. interpretations in accordance with Texas Government Code, Chapter 2001. The rules in 7 TAC Chapter 151 govern the procedures for requesting, proposing, and Currently, §151.1, §151.2, and §151.3 adopting interpretations of the home equity describe a procedure for an interested person lending provisions of Texas Constitution, to request an interpretation. Under this Article XVI, Section 50 ("Section 50"). In procedure, a person submits a request to the general, the purpose of the proposed rule general counsel of the Of

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